Market research and competitive analysis

Market research and competitive analysis

Market Research 

Every business needs to know their customers’ wants, needs and behaviours. Without this information, your business will be limited in its ability to solve problems and generate solutions because you will lack important context. This is why market research is a fundamental part of every business. You need to know and understand trends and statistics for your industry and your market. Successful businesses undertake market research on a regular basis. 

What is Market Research?

Market Research helps you gather information that tells you if an opportunity or gap exists in the market and what you need to do to meet that need. It helps you to decide if you will have buyers and if your market or industry are growing. It is the process of gathering, analyzing and interpreting information about a market, about the viability of a product or service to be offered for sale in that market, and about the past, present and potential customers for the product or service. Market research allows a company to discover the target market and get opinions and other feedback from consumers about their interest in the product or service.

Understanding how to conduct Market Research will help you to:

• Identify potential new customers
• Learn more about existing customers
• Inform their decisions regarding existing and new products or services
• Better understand their competitors
• Test new markets
• Identify performance, pricing or promotion opportunities

The following 5-step process is recommended when conducting market research:

1. Define the Problem - The first step for any marketing research activity is to clearly identify and define the problem you are trying to solve.
2. Develop the Research Plan - Once you have a problem definition, research objectives, and a preliminary set of research questions, the next step is to develop a research plan, identifying precisely what information you need to answer your questions and achieve your objectives.
3. Data Collection - Data collection is a crucial step in the research process because it enables the generation of insights that will influence the marketing strategy.
4. Data Preparation and Analysis - Analysis of data is a process of inspecting, cleaning, transforming, and modeling data with the goal of highlighting useful information, suggesting conclusions, and supporting decision making.
5. Take Action – Use the information you have found to develop new strategies for how you will operate.

Remember the information you discover is dynamic so your strategy has to keep changing.

Knowing Your Target Market

Having a vague idea of who to sell to is not good enough for an enterprise to compete in today’s ruthless business environment. For your business to thrive you need to know who your customer is. Knowing your customers will help you to target customers who are willing to pay for your product or service.  Without detailed knowledge of the customer group you want to sell to you could be losing to your competitors or missing out on opportunities to increase sales. You will to know your target market. Targeting your market is simply defining who your primary customer will be.

What is a Target Market?

A target market is a group of potential customers that you identify to sell products or services to. Each group can be divided into smaller segments. Segments are typically grouped by age, location, income and lifestyle. Once you’ve defined your target audience, you’ll find it easier to determine where and how to market your business. This is a much more effective and affordable way to reach your customers and generate business. You’ll be wasting resources if you aim too broadly, or find out too late that there aren’t enough customers for your product or service.

By understanding your market you can promote your product or service more effectively to the right customer group. The market should be measurable, sufficiently large and reachable

Understanding your Target Market will help you to know:

• Where they are
• Which media channels they use
• What their buying habits are
• How to tailor your marketing to motivate them to buy your product or service.

The following 3-step process will help you know define your target market:

1. Research your market – gather market research to help you understand your potential customer’s wants, needs and behaviours to help your business make better decisions.
2. Segment your market – determine if your market is large enough and accessible, then narrow it down into market segments and define your ideal customer for each segment.
3. Define your target customers - figure out not only who has a need for your product or service, but also who is most likely to buy it and determine how your product or service will fit into their lifestyle, what features are most appealing, how to reach them, etc.

Competitive Analysis

Your competitive analysis will help you to identify the key players in your industry, their strengths and weaknesses, their competitive advantage and explain how your business can identify its own unique selling point, in order to compete with them.

Competitive analysis helps you learn from businesses competing for your potential customers. This is key to defining a competitive edge that creates sustainable revenue. It can help you understand the barriers that prevent 

Your competitive analysis should identify your competition by product line or service and market segment. Assess the following characteristics of the competitive landscape:

• Market share
• Strengths and weaknesses
• Your window of opportunity to enter the market
• The importance of your target market to your competitors
• Any barriers that may hinder you as you enter the market
• Indirect or secondary competitors who may impact your success

Several industries might be competing to serve the same market you’re targeting. The Department of Justice provides a diagram of Porter’s Five Forces as one way you can differentiate your competitive analysis by industry. Important factors to consider include level of competition, threat of new competitors or services, and the effect of suppliers and customers on price.

DATA SOURCES FOR MARKET RESEARCH AND COMPETITIVE ANALYSIS